Budget 2021 Support for Small Business - From: Department of Finance Canada - Knotia

Budget 2021 Support for Small
Business
From: Department of Finance Canada

Backgrounder
In the face of the COVID-19 pandemic, the government acted swiftly
to provide support to protect Canadians and support people and
businesses, adapting its response as the pandemic evolved. The
government's broad suite of support measures has helped families,
protected jobs, and supported businesses across Canada. More than
eight of every ten dollars spent to fight COVID-19 and support
Canadians continues to come from the federal government.
This has, in many ways, been a two-speed recession. There have
been businesses that have managed to adapt to the pandemic and to
prosper. But others have been shut down outright by necessary public
health restrictions or deeply limited in what they can do—and many of
these highly affected businesses have been our small businesses. We
need them to get back on their feet. They are the backbone of our
economy, our main streets, and our communities.
Share of Businesses Losing at Least 20% of Revenue in 2020, by
Firm Size and Selected Sectors

Share of Small Businesses Fully Open, Selected Industries

Budget 2021 is a plan to make targeted investments in Canada's
businesses so they can hire and train Canada's workers, who will then
have more money to spend, spurring our recovery and growing an
economy with more opportunities for everyone. It is a plan to help our
businesses, especially small businesses, adopt new technologies.
Restoring permanent and long-term economic growth means that we
must help our businesses to come back stronger than ever before.

Extension of Canada Emergency Wage
Subsidy and the Canada Emergency Rent
Subsidy and Lockdown Support Beyond
June 2021
The Canada Emergency Wage Subsidy has helped more than 5.3
million Canadians keep their jobs, and the Canada Emergency Rent
Subsidy and Lockdown Support have helped more than 154,000
organizations with rent, mortgage, and other expenses. The wage
subsidy, the rent subsidy, and Lockdown Support programs are
currently set to expire in June 2021. In order to bridge Canadians
through the rest of this crisis to recovery, continued support is needed.
To give workers and employers certainty and stability over the coming
months:
     Budget 2021 proposes to extend the wage subsidy, the rent
      subsidy, and Lockdown Support until September 25, 2021. It
      also proposes to gradually decrease the rates for the wage
      subsidy and rent subsidy, beginning July 4, 2021, in order to
      ensure an orderly phase-out of the programs as vaccinations are
      completed and the economy reopens.
Extending this support will mean that millions of jobs will continue to
be protected.
Further details on these measures can be found in Annex 6 of the
budget.

Extending the Canada Emergency Business
Account
The Canada Emergency Business Account (CEBA) has provided
interest-free, partially forgivable loans to more than 850,000 Canadian
small businesses. In December 2020, the government increased the
value of the loan from $40,000 to $60,000 to help small businesses
bridge to recovery. If a business repays their loans by December 31,

2022, up to a third of the value of their loans (meaning up to $20,000)
will be forgiven. In further recognition of the ongoing pandemic, the
government recently extended the application deadline for CEBA to
June 30, 2021.
A small number of businesses have faced challenges accessing the
program, including Indigenous and rural businesses. To make sure
these businesses are not left behind, the government provides similar
support through the Regional Relief and Recovery Fund and
Indigenous Business Initiative. To make sure these businesses can
continue to access support:
     Budget 2021 proposes to extend the application deadline for
      similar support under the Regional Relief and Recovery Fund
      and the Indigenous Business Initiative until June 30, 2021.
     Budget 2021 proposes to provide up to $80 million in 2021-22,
      on a cash basis, for the Community Futures Network of Canada
      and regional development agencies, and to shift remaining funds
      under the Indigenous Business Initiative into 2021-22, to support
      an extended application deadline for the Regional Relief and
      Recovery Fund and Indigenous Business Initiative until June 30,
      2021. This would support small businesses in rural communities
      so they can continue to serve local populations.

Helping Hard-hit Businesses Hire More
Workers
For businesses that have been hit hardest by the pandemic, hiring the
workers they need to grow is a cost they may worry about taking on.
The government wants these businesses to be able to recover and
grow by hiring more people so that workers are at the forefront of our
recovery:
     Budget 2021 proposes to introduce the new Canada Recovery
      Hiring Program for eligible employers that continue to experience
      qualifying declines in revenues relative to before the pandemic.
      The proposed subsidy would offset a portion of the extra costs

employers take on as they reopen, either by increasing wages or
      hours worked, or hiring more staff. This support would only be
      available for active employees and will be available from June 6
      to November 20, 2021. Eligible employers would claim the higher
      of the Canada Emergency Wage Subsidy or the new proposed
      subsidy. The aim is to make it as easy as possible for
      businesses to hire new workers as the economy reopens.
As the rates for both the wage subsidy and the hiring program will
slowly ramp down over time, employers will have a strong incentive to
begin hiring as soon as possible and maximize their benefit.

Helping Small and Medium-sized Businesses
Move into the Digital Age
The pandemic has hastened the economy's digital transformation as
companies, workers, and consumers conduct more and more
business online. Canadian businesses need to adopt new
technologies and digitize to meet customer needs and stay
competitive.
To fuel the recovery, jobs, and growth, the government is launching
the Canada Digital Adoption Program, which will create thousands of
jobs for young Canadians and help as many as 160,000 small- and
medium-sized businesses adopt new digital technologies.
This program will provide businesses with two streams of support.
Eligible businesses will receive micro-grants to help offset the costs of
going digital—and provide support to digital trainers from a network of
up to 28,000 well trained young Canadians.
     Budget 2021 proposes to provide $1.4 billion over four years,
      starting in 2021-22, to:
        o   Work with organizations across Canada to provide access
            to skills, training, and advisory services for all businesses
            accessing this program.
        o   Provide micro-grants to smaller, main street businesses to
            support costs associated with technology adoption.

o   Create training and work opportunities for as many as
            28,000 young people to help small- and medium-sized
            businesses across Canada adopt new technology.
     Budget 2021 proposes to provide $2.6 billion over four years, on
      a cash basis, starting in 2021-22, to the Business Development
      Bank of Canada to help small- and medium-sized businesses
      finance technology adoption.

Supporting Business Investments
For Canada's economic recovery to take root, businesses will need to
invest in new technologies and move forward with capital projects.
Building on the significant tax incentives introduced in the 2018 Fall
Economic Statement, additional support is needed to further boost
business investments that will create jobs today and in the future.
     Budget 2021 proposes to allow immediate expensing of up to
      $1.5 million of eligible investments by Canadian-controlled
      private corporations made on or after Budget Day, and before
      2024. Eligible investments will cover over 60 per cent of capital
      investments typically made by Canadian-controlled private
      corporations.
This incentive targets short- and medium-term capital investments that
can accelerate our recovery. This includes investments in a broad
range of assets, including, but not limited to, digital assets and
intellectual property, helping to further incentivize businesses to
transition to a more productive, knowledge-intensive economy and will
include digital assets and intellectual property. These larger
deductions will help businesses—particularly small- and medium-sized
businesses—by making it more attractive to invest in assets that drive
growth. Larger deductions will also free up capital that businesses can
use to create more good middle class jobs.

Enhancing the Canada Small Business
Financing Program
Small businesses need access to financing in order to invest in people
and innovation, and to have the space to operate and grow. To make
sure small business and independent entrepreneurs can access the
capital they need to recover, innovate, and grow in the long-term:
     Budget 2021 proposes to improve the Canada Small Business
      Financing Program through amendments to the Canada Small
      Business Financing Act and its regulations. These proposed
      amendments are projected to increase annual financing by $560
      million, supporting approximately 2,900 additional small
      businesses. Proposed amendments include:
        o   Expanding loan class eligibility to include lending against
            intellectual property and start-up assets and expenses.
        o   Increasing the maximum loan amount from $350,000 to
            $500,000 and extending the loan coverage period from 10
            to 15 years for equipment and leasehold improvements.
        o   Expanding borrower eligibility to include non-profit and
            charitable social enterprises.
        o   Introducing a new line of credit product to help with liquidity
            and cover short-term working capital needs.

Lowering the Cost of Doing Business by
Reducing Credit Card Transaction Fees
The pandemic has brought about a rapid and significant increase in
electronic payments and online transactions. Small- and medium-
sized businesses, which have been hard hit by COVID-19, incur fees
for these transactions, also known as interchange fees, which are
amongst the highest in the world.
The government will engage with key stakeholders to work towards
three objectives:

   Lower the average overall cost of interchange fees for
      merchants.
     Ensure that small businesses benefit from pricing that is similar
      to large businesses.
     Protect existing rewards points of consumers.

Following consultations with stakeholders, detailed next steps will be
outlined as part of the 2021 Fall Economic Statement, including
legislative amendments to the Payment Card Networks Act that would
provide authority to regulate interchange fees, if necessary.

Removing Barriers to Internal Trade
For too long, trade barriers within our own country have held back
Canadian businesses from reaching the full force of the Canadian
market. Removing barriers to trade between provinces and territories
will help build a more prosperous economy—creating jobs, fueling
business expansion, expanding consumer choice of Canadian goods
and services, and helping regional economies grow.
     Budget 2021 proposes to allocate $21 million over three years,
      starting in 2021-22, to:
        o   Work with provincial and territorial partners to enhance the
            capacity of the Internal Trade Secretariat that supports the
            Canadian Free Trade Agreement in order to accelerate the
            reduction of trade barriers within Canada.
        o   Advance work with willing partners towards creating a
            repository of open and accessible pan-Canadian internal
            trade data to identify barriers, including licensing and
            professional certification requirements, that we can work
            together to reduce them.
        o   Pursue internal trade objectives through new or renewed
            discretionary federal transfers to provinces and territories.

Supporting Jobs and Growth in All
Communities
As Canada builds back better, no community will be left behind. From
the outset of the pandemic, regional development agencies have been
on the ground across Canada, helping businesses weather the effects
of the pandemic. Through the $2 billion Regional Relief and Recovery
Fund, they have been providing liquidity to businesses, helping bridge
them to the recovery, and preserving more than 125,000 jobs. To
ensure businesses in every corner of Canada have the support they
need to get through the pandemic and that they are brought along in
our economic recovery:
     Budget 2021 proposes to provide $700 million over three years,
      starting in 2021-22, for the regional development agencies to
      support business financing. This would position local economies
      for long-term growth by transitioning to a green economy,
      fostering an inclusive recovery, enhancing competitiveness, and
      creating jobs in every corner of the country.
     Budget 2021 proposes to create a new agency for British
      Columbia and to provide $553.1 million over five years, starting
      in 2021 22, and $110.6 million ongoing, to support the new
      agency and ensure businesses in B.C. can grow and create
      good jobs for British Columbians. Existing core program funding
      from Western Economic Diversification will remain to support the
      Prairies, making additional support available for businesses in
      Alberta, Saskatchewan, and Manitoba.
     Furthermore, the federal government will work to make FedNor a
      standalone regional development agency and strengthen the
      economic development of Northern Ontario.

Canada Community Revitalization Fund
Main streets, farmers' markets, and other gathering places underpin
local economies. In many communities, the most vibrant spaces in our
communities have laid dormant as Canadians took precautions to stay

safe. Recognizing that economic recovery is tightly linked to the vitality
of our local communities:
     Budget 2021 proposes to provide $500 million over two years,
      starting in 2021-22, to the regional development agencies for
      community infrastructure. These projects will stimulate local
      economies, create jobs, and improve the quality of life for
      Canadians from coast to coast to coast.